THE wool market is firing as a post-flood surge in supply struggles to dampen demand for Merino fleeces.
Last week marked the third consecutive run of high volumes with the national offering of 47190 bales having little effect on the Eastern Market Indicator (EMI) which soared to 1314 cents a kilogram – up 24c.
Compounded by a favourable exchange rate, Jemalong Wool managing director Rowan Woods said the “Trumped-up” market was set to soar.
“The flooding in the spring held everything off – if you could get wool off sheep was one thing but getting it to store was another – that hump in supply is starting to dissipate,” Mr Woods said.
“Maybe you call it the ‘Trump’ effect, but the dollar has cheapened in the last two weeks and all this has galvanised to a point where the market is firing.”
The record wet winter has impacted on the timing of shearing and transporting of bales to store, with a volume of wool that would have been sold a month earlier only now coming to market.
“When you put a pothole in the road – such as a tightening of supply due to a rain event – it puts a real stop on things,” Mr Woods said.
“If the dollar stays low, what is the market going to do when we’re back at 35,000 bales (offered in a week)? You don’t need to be a genius to have a stab.”
Mr Woods said demand from Western Europe and India was up, while Chinese continued “powering ahead”, absorbing 71 per cent of exports last week.
Rural Finance’s November wool update reported Australia’s wool production down 6.7pc for the past year, while the EMI was 6pc higher than November 2015.
It forecast this season’s wool clip to shrink to 325,000 tonnes, although favourable seasonal conditions had seen above average wool cuts per head.
“Growers have been happy to meet the market in the previous months, there are limited bales in storage, and so that backlog is not there to fall back on in the autumn,” Mr Woods said.
A luxury Italian weaver order was behind Tim Marwedel’s of G Schneider Australia competitive, 1915c/kg clean bid on an outstanding 18-micron lot offered by Rex Western and family, from Cooma, NSW, at Yennora on Thursday.
Western’s woolbroker Gordon Litchfield said it was a “really extreme” sale.
Buyers have been active on Wooltrade with 856 bales sold online – its largest volume traded in over a month.
“It appears exporters and buyers are short for their immediate shipments, while commission buyers were aided by the exchange rate,” AuctionsPlus market operations supervisor Tom Rookyard said.